The Motion Picture Association of Taipei allegedly violated Article 10 of the Fair Trade Law by improperly fixing prices under Article 28 of the Enforcement Rules of the Motion Pictures Act
Case:
The Motion Picture Association of Taipei allegedly violated Article 10 of the Fair Trade Law by improperly fixing prices under Article 28 of the Enforcement Rules of the Motion Pictures Act
Key Words:
motion picture distribution industry trade association, improper price-fixing, proof of membership certificate
Reference:
Fair Trade Commission Decision of January 18, 2001 (the 481st Commissioners' Meeting)
Industry:
Motion Picture Distribution Industry (8430)
Relevant Law:
Article 10 of the Fair Trade Law
Summary:
1. This case originated out of a Control Yuan inquiry into the fairness of Article 25 of the Motion Pictures Act, which provides for the collection of "examination fees." The Control Yuan proposed that the Fair Trade Commission (the Commission) conduct an investigation to determine whether the Motion Picture Association of Taipei had improperly fixed prices under Article 28 of the Enforcement Rules of the Motion Pictures Act, thereby violating Article 10 of the Fair Trade Law. The Control Yuan gave the following reasons for proposing the investigation: "Under Article 28 of the Enforcement Rules of the Motion Pictures Act, companies that request film inspections must include with their applications a proof of membership certificate issued by their respective trade associations less than one month prior to the application date. The aforementioned Enforcement Rules were adopted in the spirit of Article 12 of the Commercial Organization Law, which mandates private companies to join their respective trade associations to promote and strengthen the development of private-sector trade associations. Consequently, it is still improbable to allege that the Government Information Office drafted this regulation to benefit the motion picture trade associations. However, there are only two trade associations established by film distributors in Chinese Taipei, the Motion Picture Association of Taipei and the Motion Picture Association of Kaoshiung. The Commission found that compared with the latter's monthly membership fee of just NT$2,000, the former collects a variety of fees in many categories - entrance membership fees and special donations totaling NT$30,000, monthly membership fees of NT$600, issuance fees for the proof of membership certificate of NT$1,000 per copy and other miscellaneous fees, including "anti-piracy donations." 2. It was found that the Motion Picture Association of Taipei, which has 179 members, charges its members a number of fees including entrance membership fees (NT$3,600), special donations (NT$26,400), regular monthly membership fees (NT$600), anti-piracy fees (NT$1,000 per film), and issuance fees for the proof of membership certificate (NT$1,000 each copy); whereas the Motion Picture Association of Kaoshiung, which has 12 members, charges its members only a monthly fee of NT$2,000. 3. The Government Information Office (GIO), the competent authority regulating the distribution of motion pictures, gave the following opinion in this case: The Motion Picture Association of Taipei collects entrance membership fees, special donations, monthly fees and issuance fees for the proof of membership certificate for use by the Association in its daily operations. Anti-piracy donations are to be used in anti-piracy litigation and special investigations when members incur damages from infringements on their rights. Members voted on and approved the initial membership fees and special donations charged to new members and the monthly membership fees charged to all members during the association's general meeting. The association's board of supervisors also approved the charges for the issuance of proof of membership certificates and the collection of anti-piracy donations to be used in daily operations and anti-piracy work. All fees are collected pursuant to Article 33 of the Civilian Organization Law or resolutions passed by the board of supervisors, which could be verified by the minutes of the general meetings or the meetings of board of supervisors sent to and kept on file with the GIO. A structurally sound organization, the Association offers regular assistance in the promotion of the government policy, and is responsible for member services such as emergency assistance, insurance, and expansion of overseas markets. Fees charged to members are for the maintenance and provision of better services, and safeguarding of members' rights and interests. 4. The Taipei City Government's Bureau of Social Affairs, the competent authority governing trade associations in Taipei, gave the following opinion in this case: The Motion Picture Association of Taipei legitimately exercises its right to charge membership entrance fees, special donations, monthly fees, and certificate issuance fees (among others) to members as permitted by Article 33 of the Commercial Organization Law and Articles 17 and 18 of the Rules Governing Assets Belonging to Industrial and Commercial Organizations. As part of the Association's incomes from the provision of services to members, the issuance fee of NT$1,000 per copy for the membership certificate was proposed and passed at the 11th meeting of its board of supervisors on 8 August 1997. The new charge became effective on 1 September of the same year. 5. Members of the Motion Picture Association of Taipei must pay an initial membership fee of NT$30,000 (entrance fees of NT$3,600 and "special donations" of NT$26,400), annual membership fees of NT$7,200 (paid by monthly installments of NT$600), film distribution fees of NT$2,000 per film (anti-piracy donation of NT$1,000 and proof of membership certificate issuance fee of NT$1,000). Thus, members of the first year pay NT$30,000 plus NT$7,200 plus NT$2,000 multiplied by the number of films distributed in the first year (NT$30,000 + NT$7,200 + NT$2,000 x the number of films distributed). Beginning in the second year, members pay NT$7,200 plus NT$2,000 multiplied by the number of films distributed in that year (NT$7,200 + NT$2,000 x the number of films distributed). Members of the Motion Picture Association of Kaoshiung, however, pay only an annual membership fee of NT$24,000 (paid in monthly installments of NT$2,000). Comparing the two associations, the Motion Picture Association of Taipei does charge a greater array of fees. However, the actual amount of money paid annually by its members depends on the number of films the member distributed during the year. In the last three years, the Association has issued 1,217 membership certificates (345 in the year 2000). The Association has 179 members, with each member releasing an average of about two films per year. Following this line, the average non-first year member pays even less than do members of the Kaoshiung Association. Members do not, however, distribute the same number of films each year. It is thus improbable to jump to the conclusion from the above that one association charges higher fees of its members than the other. 6. Next, the Commission considered whether the collection of initial membership entrance fees, special donations, and regular membership fees is in violation of the Fair Trade Law. Article 33 of the Civilian Organization Law stipulates that "civilian organizations may obtain revenues from the following sources: (1) membership entrance fees; (2) annual membership dues; (3) business fees; (4) donations from members; (5) profits derived from commissioning; (6) funds and interests derived therefrom; (7) other incomes." Therefore, the Civilian Organization Law is the governing law of trade associations' fee-collecting practices and the Taipei City Government and Government Information Office shall be the competent authorities responsible for supervision of those practices. Furthermore, the collection of above-mentioned fees and the exact amounts collectible have been passed by resolutions of the Associations' general meetings of members. The free will of the members has not been unduly suppressed in the process. It is quite evident that the Fair Trade Law is inapplicable. 7. The Commission considered further whether the collection of anti-piracy donations violates the Fair Trade Law. The anti-piracy donations are to be used to strengthen the Association's ability to fight against piracy and to assist the Government Information Office when carrying out anti-piracy raids in the name of ROC Motion Pictures Anti-piracy Committee. The purpose of the charge is to safeguard members' rights and interests, and the service is provided to all members with no strings attached, thereby posing no threat to the market competition. Furthermore, should members find the service or the amount charged unacceptable, they are free to express their objections to the service or fees charged at the Associations members' meetings, which might even lead to a halt to the service or charge. Therefore, members' free will has not been unduly suppressed. The Government Information Office, which serves as the competent authority for motion picture distribution businesses, states that the anti-piracy service performed by the Association is beneficial to the growth and development of the country's motion picture businesses, so the Association's action cannot be considered a violation of the Fair Trade Law. 8. On the question of whether charging fees for the issuance of proof of membership certificates violates the Fair Trade Law, the Commission found as follows: The nature of the proof of membership certificate charge is similar to that of other fees payable by members as required by the internal regulations of the Association which, having been approved, are forwarded to relevant competent authorities for reference. As with the anti-piracy service in the previous paragraph, it applies to all members without affecting competition among members or in any way hindering competition in the relevant market. Should members find the amount charged unacceptable, they are free to express their objections at members' meetings, which could lead to a halt to the charge. Therefore, members' free will has not been unduly suppressed in the process. In addition, the Government Information Office, the competent authority in this case, also approved the said charge. Therefore, the Association's charge to members for proof of membership certificate issuance cannot be considered a violation of the Fair Trade Law. Summarized by Hsu, Cho-Yuan; Supervised by Yuan, Shiu-Yun